COMMENTS

  Hi Mithun

Sorry, I missed out. Actually today has been very hectic. I had read your post, and was about to reply when my father called and informed me that my mother got hit by a Motorcyclist while crossing the road. Both people thought they could cross the other before reaching each other and the calculations did not work out. For a 69 year old she is quite spry but still managed to fracture her 7th and 8th rib. So she is out for the count, for the next 2 weeks.

With regards to air cargo. I have written about this in my blog. http://deveshagarwal.blogspot.com/2008/04/perils-of-pioneering-bangalores-loss-of.html and http://deveshagarwal.blogspot.com/2008/03/rgia-rebellion-lessons-for-bial.html.

We forget the importance of air cargo. There is a joke in the air cargo fraternity. If the morning flights to Delhi and Mumbai get delayed, the bride will not have a garland to marry her groom with that evening. If airlines can help it, they will just carry flowers and no passengers on their morning flights to these cities. So much is the demand. 

BIAL officials including CEO Mr. Albert Brunner have publically admitted that they have plain forgotten about cargo. As you may be aware, BIAL, is just a gigantic outsourcing operation. The actual BIAL consortium is really responsible for very little. Everything is outsourced.

Same with cargo. BIAL thought their responsibility ended by contracting two warehouses to Menzies-Bobba, and Air India-SATS. These two warehouses provided cargo handling for the airlines, not for the public. i.e. their job is to get the cargo on and off the plane. Out of these two, only Bobba warehouse is ready, but their warehouse does not live up to the original claims of BIAL. They do not have multi-temperature warehouses i.e. frozen (-20 Deg C), chiller (0-4 Deg C), cold (10-15 Deg C). Space is also a concern. BIAL completely forgot about Customs, Air Cargo agents, and Customs House Agents, and their offices and warehouses.

In my perils article, I have compared Singapore's Changi and Penang Malaysia airports to BIAL. Both these airports are very different in size, but common in their approach and dedication to cargo. 

Obviously there was a rebellion. Customs was pacified by giving them accomodation within the agents' warehouses. However, it was done at such a late stage that initially Customs was not able to commission their EDI system in time. So an "temporary" plan was hatched where the paper work would be filed at HAL airports, but the inspection and clearance would be done at BIAL. You can imagine the running around that would need to be done, and the opportunities for abuse it opens up.

However, there was no space for cargo and customs agents. Cargo agents collect cargo from the public, consolidate and palletize and deliver it to the cargo warehouses of Bobba or AI-SATS. For this they need warehouse space and office space. Similarly Customs agents have to interface with customs for bill filing, inspection, duty payment and clearance, and they need offices.

In case of HAL airport there was land around the airport, and offices and warehouses were created. However, in case of BIAL the nearest land is over 7km away from the cargo terminal, and of course there is no construction. BIAL has had discussions and facing a complete walk out, they have made temporary arrangements, and will construct a cargo village in 18 months.

Here I must admit, anything BIAL or its contractors build will be better than MSIL and JWG warehouses. For too long Bangalore industry has suffered at the hands of these two.

However, it is still not the world class facility it can be. BIAL has this golden opportunity to create a proper cargo hub, and steal away high value business from Mumbai and Delhi, especially in the foods, medical, flowers, and chemicals, but this requires proper cold facilities, and a highly reactive Customs authority.

I think, this will make a good article for my blog. :)

As Edward Murrow put it -- "GOOD NIGHT AND GOOD LUCK" 

-----------------------

Regards

Devesh R. Agarwal

Visit my aviation blog at http://deveshagarwal.blogspot.com

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From 'The Hindu':

http://www.hindu.com/2008/04/17/stories/2008041750020100.htm

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I just went thru this article and I dont understand how renegotiating the no-other-airport clause is going to make travel to the new airport better.

I have been watching the anand nagar underpass and the BDA flyover work progress for the past month and it has come to a standstill. I saw some activity only today after more than a month. We need to sue inaction by authorities who build the approach to the airport not renegotiate some clause to make access better. Definitely wrong tree.

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The only bottom line solution is to gear up BIAL to meet all expectations... I guess Mr Patel is meeting stakeholders again on 29th to decide the fate of Bangalore Airport... hope he is reading this blog too....

Maybe some one who knows Mr Patels Email ID can forward this blog for him to read.

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At a discussion session at the Bangalore International Centre, last week, while Mr Baligar, IAS, Principal Sec (Infrastructure), GoK, presented the governments case against the retention of the HAL airport, 3 other apeakers, viz - Mr R Ravichander (formerly member BATF), Mr Vinod Vyasulu (an expert on public finance) presented their arguments for the retention of HAL airport operations. The text of Mr Ravichander's presentation is reproduced below:

First a confession - till Nov 2007, I was for honouring the sanctity of the contract and closing HAL. I have since revised my view and I shall present my case for being a turncoat shortly.

A disclaimer - asking for HAL airport to remain open does not mean one is anti BIAL. BIAL is the future and is needed for the city. But HAL can co exist with BIAL being compensated.

The reasons why HAL should remain open (and none of them is about connectivity at all) :

Future proofing is in the public interest. The capacity of BIAL is 12 mn passengers. We are currently at 10.5 mn passengers annually and we will reach current capacity by middle of 2009. With one runway the capacity can go to 14-15 mn passengers, a number that will be reached by mid 2011. The new runway (if it does come up) will not be before 2014 (admitted by BIAL and Govt). So expect shortage in capacity between 2011-14. I am not even referring to cargo which is reasonably messed up in the short term for the next year at BIAL

One argument is that Hyd closed Begumpet so what is the big fuss? Hyd has a current demand of 6.5 mn passengers and an airport with a capacity of 12 mn passengers. Hyd and Blr situation not comparable.

For a rapidly growing developing economy like India, conserving working infra assets makes sense (I do sound like Prakash Karat here). Closing down a working asset especially when it is known that we are going to run into a capacity constraint seems a silly thing to do. And spending Rs 4000 crores of public money on a high speed rail link from KSCA for a Rs. 2220 crores airport project is questionable when alternatives exist. And this spending for the fat cats is not going to go down well with aam aadmi.

A private sector monopoly in the infra sector is not in the public interest particularly in the absence of a strong regulator. Someday we will chat about their revenue models. I think a duopoly will keep both parties honest in the interest of citizens.

Closing HAL will be a self goal. Expect TN to announce a Hosur airport in due course post final closure. And expect that to join Hognekkal as an issue sometime down the line.

2 airports will strengthen State competitiveness, investments, job creation, et all.

The contract. It is not cast in stone. The Global tender did not have HAL closure as a promise. It was in 2004 just before the concession agreement was signed that BIAL insisted on it. And the Ministry of Civil Aviation agreed.

I realize a suggestion such as HAL to be open has consequences. Let me deal with them:

It is not my case that HAL be kept open and BIAL can take a walk. BIAL is in the driver’s seat with the contract. I am for users of HAL airport compensating BIAL on terms to be decided - the general public should not be made to pay for it. I think market can decide the demand and adjust supply accordingly - for instance the Mumbai-HAL fare can be 5500 and the Mumbai - BIAL fare can be 4200 and the difference is given to BIAL. This can be decided by auctioning slots too. BIAL could be made a shareholder in a HAL airport SPV.

A point that is made is that PPP will suffer if we go back on the contract. I don’t think so. Business will come where money is to be made and India is gold rush territory. It will suffer if there is arbitrariness in the decision to keep HAL open. If there is compensation to BIAL then rule of law applies. For eg. in a recent Peru airport, 70 odd conditions were renegotiated. The PPP models are imperfect and they are being honed with each experience.

BIAL claims they will make huge losses and folks have bid at the airport expecting a monopoly. A public hearing on finances should help get a sense of the ‘loss’. In their original projections they expected less than 7 mn passengers this year. If it is proven BIAL is financially devastated then HAL should not be open.

Finally, I repeat it is not about connectivity and travel time to BIAL which will be a hassle in the short term. It’s about a few other issues I have tabled. You may or may not agree. I rest my case.

Ravichander

PS: You may have noticed that I have not expressed my views on the matter. My concern is more for the aam aadmi - the bus traveller :))), even if he is beginning to switch to the VOLVO now.

Muralidhar Rao

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